Abstract
This study aims to examine the linkage among liquidity, leverage, and firm value. The study employed panel data from listed banks on the Ghana Stock Exchange from 2010 to 2020 and a quantitative design to achieve the objectives of the study. The purposive sampling approach is used to source data from the Ghana Stock Exchange (GSE) and various entities’ websites. With the aid of Granger causality, the study demonstrates a causal relationship between liquidity and firm value and a unidirectional causality between leverage and firm value. Further, the study showed that prudent leverage structures improve firm value by optimizing debt levels to improve shareholders’ worth. The study recommended that firms need to sustainably manage their debts and liquidity to enhance their firm value because investing in viable projects with these resources of a firm will overall enhance firm value. In so doing, this will enhance the level of trust and confidence of diverse stakeholders such as clients, owners and potential investors, since shareholder’s wealth emanates from the sustainable use of firm resources which in turn promotes firm value.
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